Asian Stocks Fall Amid Valuation Concerns; Honda Drops on Yen
Sept. 14 (Bloomberg) -- Asian stocks fell, dragging theMSCI Asia Pacific Index from a one-year high, amid concern asix-month rally had overvalued prospects for an earningsrecovery in the region.
Honda Motor Co., which gets 47 percent of its sales inNorth America, retreated 2.4 percent in Tokyo on concern theyen’s appreciation to a seven-month high against the dollar willreduce the value of overseas revenue. National Australian BankLtd., the nation’s biggest by assets, dropped 2.6 percent inSydney after Treasurer Wayne Swan said unemployment will climb.Santos Ltd., Australia’s No. 3 oil producer, sank 3 percent ascommodity prices declined.
“Expectations may be beginning to moderate regarding theongoing strength of the recovery,” said Tim Schroeders, whohelps manage about $1 billion at Pengana Capital Ltd. inMelbourne. “Investors will be concentrating on discerning realunderlying growth in the global economy.”
The MSCI Asia Pacific Index sank 1.4 percent to 116.22 asof 1:05 p.m. in Tokyo after ending last week at its highestlevel since Sept. 9, 2008. The gauge has climbed 65 percent froma five-year low on March 9 as government stimulus measuresworldwide pulled the global economy out of recession.
Japan’s Nikkei 225 Stock Average fell 2.2 percent, whileHong Kong’s Hang Seng Index dropped 0.9 percent. Australia’sS&P/ASX 200 Index declined 1.1 percent.
Consumer Confidence
K.K. DaVinci Holdings, a real-estate investor, tumbled 14percent in Tokyo after the company said it wasn’t likely toreach an agreement on a loan extension. Among stocks that gainedtoday, Japan Airlines Corp. jumped 8 percent on speculationAmerican Airlines, Inc. will buy a stake in the company.
Futures on the U.S. Standard & Poor’s 500 Index dropped 1percent. The gauge dipped 0.1 percent on Sept. 11 even after areport showed the Reuters/University of Michigan preliminaryindex of consumer sentiment rose more than economists hadestimated in September.
U.S. treasuries rose on speculation declines in Asianstocks and the euro will bolster demand for the safest assets.Philippe Chaumel, a Paris-based money manager at Rothschild &Cie Gestion who beat 94 percent of his peers in the past year,said he’s switching investments into so-called defensive stocks.
The MSCI Asia Pacific Index gained 4.4 percent last week,its biggest weekly gain since the period ended July 24. Therally since March has driven the average price of stocks on thegauge to 24 times their estimated net income for this year,compared with 17 times for the S&P 500 and 16 times for Europe’sDow Jones Stoxx 600 Index.
Stronger Yen
Honda fell 2.4 percent to 2,795 yen as the yen appreciatedversus the dollar to as much as 90.21 today, a level not seensince Feb. 12. A stronger yen reduces the value of overseassales at Japanese companies when converted into their homecurrency.
Sony Corp., the world’s second-biggest maker of consumerelectronics, dropped 2.6 percent to 2,420 yen. Toyota MotorCorp., which got 31 percent of its revenue last fiscal year inNorth America, lost 1.8 percent to 3,770 yen.
Japan’s large manufacturers expect the yen to trade at anaverage of 94.85 this year, according to the Bank of Japan’smost recent quarterly Tankan survey.
“The current exchange rate will adversely affect companiesthat base their forecasts on 95 yen per dollar,” said YoshinoriNagano, a senior strategist at Tokyo-based Daiwa AssetManagement Co., which oversees the equivalent of $95 billion.“There aren’t a lot of players in the market and that amplifiesdeclines and gains in equities.”
Australia’s Jobless Rate
In Sydney, National Australia shares dropped 2.6 percent toA$28.28. Australia & New Zealand Banking Group Ltd. declined 2.7percent to A$22.08.
Australia’s unemployment rate will rise from 5.8 percent,boosting the need to maintain the government’s economic stimulusmeasures, Treasurer Swan said in his weekly economic notereleased yesterday.
“Ripping the stimulus out prematurely would only pull therug out from under the recovery, undermine confidence andthreaten jobs,” Swan wrote.
Separately, Joseph Stiglitz, a Nobel Prize-winningeconomist, said in an interview in Paris over the weekend thatthe U.S. banking system is in a worse state than before theseizure in credit markets and collapse of Lehman BrothersHoldings Inc.
Lehman Bankruptcy
Tomorrow is the one-year anniversary of Lehman’s bankruptcyfiling, which exacerbated the credit crunch and helped drag theglobal economy into its worst slowdown since World War II.Losses from the credit crisis at the world’s biggest financialinstitutions since the start of 2007 have climbed to more than$1.6 trillion.
New Zealand’s statistics office today reported a 0.5percent decline in the country’s retail sales, missing the 0.4percent increase anticipated by economists in a Bloomberg survey.
Fisher & Paykel Appliances Holdings Ltd., New Zealand’sbiggest maker of cookers and washers, lost 1.3 percent to 77 NewZealand cents in Wellington. Warehouse Group Ltd., the country’sbiggest discount retailer, dropped 0.9 percent to NZ$4.21.
In Sydney, Santos sank 3.3 percent to A$15.36, while RioTinto Group, the world’s No. 3 mining company, fell 1.6 percentto A$58.29. Mitsui & Co., which counts commodities as itsbiggest source of profit, lost 1.9 percent to 1,210 yen in Tokyo.
Copper futures in New York dropped 2.4 percent today, thefourth day of declines. A gauge of six metals in London lost 3.5percent on Sept. 11. Crude oil dropped 1.1 percent today, addingto a 3.7 percent slump on Sept. 11.
Aussie, Kiwi Dollars
The Australian and New Zealand dollars fell today,retreating from last week’s strongest levels since August 2008,following the declines in commodities, which account for morethan half of the two nations’ exports.
K.K. DaVinci, which manages real-estate investment funds,tumbled 14 percent to 12,350 yen following the statement on itsloan extension.
Japan Airlines climbed 8 percent to 176 yen. AmericanAirlines may buy a stake in the carrier, people familiar withthe plan said. Japan Airlines, which has received threegovernment bailouts since 2001, is also discussing possiblestake sales to Delta Air Lines Inc. and Air France-KLM, peoplefamiliar with those negotiations have said.
Japan Air is talking with other carriers to strengthen itsbusiness, spokeswoman Sze Hunn Yap said in Tokyo, declining tocomment on discussions or possible investments.
To contact the reporter for this story:Shani Raja in Sydney at sraja4@bloomberg.net.
Last Updated: September 14, 2009 00:09 EDTSource: Bloomberg
